Universal and Capitol fly high with copyright win

May 2016

COPYRIGHTRecorded music

Universal Music and Capitol Records have obtained summary judgment against IFP and parent company Global Eagle, an in flight music licensing company, and the two recoded music companies can now look forward to a jury deciding the quantum of damages to be awarded, with reports saying this “could be worth hundreds of millions of dollars.”
IFP is a worldwide provider of in-flight entertainment from movies to songs and IFP provided American Airlines (and later US Airways) with music playlists obtained via physical CDs and digital downloads. In 2008 the company approached the major labels for a deal and what followed has been described as a “few years of painstaking negotiations over advances and revenue apportionment, complicated by some catalogs not being available for in-flight licensing as well as IFP not wishing to let the cat out of the bag about the lack of licenses.”

Added to this was the fact that although IFP was based in Los Angeles, and had completed some of the early reproduction work there, the company said that duplication and encoding was taking place in the U.K. under a different licensing regime. Added to this was the position advanced by IFP that it had reached oral or implied license and that the record companies committed fraud and tortiously interfered with its contracts with American and United.
In his summary judgment ruling U.S. District Judge George Wu wrote: “At best, there is evidence that the parties discussed various terms, but never reached any final agreements” and further, “There is ample evidence that IFP knew it had no licenses from Plaintiffs and that it could be sued for copyright infringement, and no evidence that Plaintiffs ever indicated to IFP that any such licenses were forthcoming or misrepresented any existing fact.”
Wu also found that IFP acted wilfully by collecting money from airlines for copyright licenses in anticipation that it would one day have to make amends. The judge wrote: “As Plaintiffs aptly state, ‘[i]f IFP’s infringements were not wilful, no infringements could ever be.‘”
Judge Wu also had to decide on the issue of pre-1972 sound recordings not protected by federal copyright law, but now being interpreted under state law to protect against misappropriation. To this, IFP threw up an argument that such claims were pre empted by the federal Airline Deregulation Act, but that argument failed because in-flight entertainment is deemed as a “service” under the statute and that the connection with state law claims is substantial.